Governor cites lower oil prices in budget plan
Gov. Mike Dunleavy submitted former Gov. Bill Walker’s proposed $11.5 billion FY 2020 budget on Dec. 15 as a “placeholder” to meet the statutory deadline for submitting a budget. The full 2018 revenue forecast was also released, but there differences with the preliminary forecast released by Walker two weeks earlier, just before Dunlevy took office. The Dec. 15 budget assumes a $64-per-barrel average oil price for Fiscal 2020, the budget year beginning next July, compared with $75/barrel assumed by Walker. Assuming a sta- tus-quo state budget and a larger Permanent Fund Dividend planned by Dunleavy, that oil price results in a $1.6 billion deficit. Of that, $911 million is due to the larger PFD payout, a key campaign pledge by Dun- leavy. About $698 million of the projected deficit is due to the lower oil price assumption.
Where oil prices will really average over the next year and a half is anyone’s guess. Prices for North Slope crude oil have dropped from $70.58/barrel, the average last July, to $60.38/barrel, the average for the first three weeks of December, and prices closed at $55.69/barrel on Dec. 26. The budget filed Dec. 15, a for- mality (it is required), featured an operating budget of $5.49 billion with $4.86 billion for state operating agencies and $246.5 million for a capital budget. The amounts are close to the current-year FY 2019 spend- ing. They are Undesignated General Fund spending totals and do not include federal or other funds that are essentially budget pass-thoroughs. A revamped budget will come from the new governor in January.

Is governor setting the stage for budget cuts?
Dunleavy’s highlighting of the projected $1.6 billion deficit would appear to set the stage for budget cuts by the new administration, if that course is decided on, even though most of the shortfall would result from the larger PFD. “All items of state expenditures are on the table. The state must learn to live within its means and we get there by making the tough spending choices,” Office of Management and Budget Director Donna Arduin said in a statement issued by the administration.

Earthquake damage in Southcentral more extensive than first thought
Damage from the 7.0 earthquake in Southcentral Alaska was more extensive than first thought, particu- larly in schools and other large structures in the Matanuska-Susitna Borough and Eagle River community within Anchorage, which were near the epicenter of the quake. Those areas were also not covered by build- ing codes, which did apply in the main Anchorage bowl area. Also, most damage including that within the Anchorage bowl was related to soil conditions beneath the structure, particularly at sites where construction occurred on man-made fill.
About 620 homes suffered damage in Southcentral Alaska, 288 severely damaged and 9 homes destroyed. A state-federal estimate puts repair costs at $76 million, including $28 million in homes and $48 million in public facilities. The damage assessment is continuing. Anchorage Economic Development Corp. now has a survey of its members underway to further aid a community-wide damage estimate. Most damage resulted from ground movement and not structural failure in buildings, engineers are concluding. The Legislsture gave the state transportation department authority to receive $25 million in federal funds for repair work.

Few Southcentral residents had earthquake insurance
Meanwhile, few Southcentral Alaska homeowners with damage had earthquake insurance, state insurance official said. Only about 15 percent of residents had purchased the coverage, mainly because of cost – a policy would typically require an annual premium as much as 20 percent of the value of a home, brokers reported. Federal grants will be available to assist residential property owners, while Small Business Admin- istration loans will be available for businesses. Alaska Sen. Lisa Murkowski said Congress will move on a supplemental disaster assistance funding measure in January that will include money for Alaska earthquake and California fire damage. Year-end 2018 disaster funding is allocated to hurricane damage in the U.S. Southeast and gulf coast.

State transportation agency praised for quick earthquake highway repairs
The state Dept. of Transportation and Public Facilities received gold stars for its fast response in repairing damaged roads and bridges, even if many were temporary fixes. One example was the reopening of an off- ramp on Anchorage’s busy Minnesota Drive expressway within four days of its collapse during the quake on Nov. 30. Permanent repairs will be done next spring, DOTPF officials said. One factor aiding the fast re- sponse was an incident last spring when a bridge over the Glenn Highway was damaged by a truck collision, closing the busy highway. Emergency response plans put in place following that were used in responding to the Nov. 30 highway closures. So far the state has spent $25 million on temporary road and bridge repairs.

Small Port MacKenzie LNG plan undamaged by quake
A small natural gas liquefaction plant near Point MacKenzie in the Matanuska-Susitna Borough was not damaged in the 7.0 earthquake that shook the area. Damage in the Mat–Su was extensive because of proximity to the quake’s epicenter. Access to the plant was affected because Vine Road, which serves the area, was heavily damaged. The Interior Gas Utility, which now owns the plant, credited building codes and facility standards. The plant is operated by Titan LNG, which is owned by the IGU, which serves natural gas customers in Fairbanks. The plant produces about 38,000 gallons/day of LNG, which are trucked to Fairbanks for the utility.

More economic data: Personal income up; slower population growth expected
Alaska personal income, including both wage and nonwage, has been increasing since 2016 despite the decline in statewide employment, according to federal data. Income rose to $43.5 billion in the second quarter of 2018. Slower population growth is now projected for Alaska. In its latest estimate the state Department of Labor pro- jected that Alaska’s population will grow to 838,000 by 2024, down from 900,000 projected in a 2016 estimate by the department. This is a “middle” case between high and low projections.

BLM conveys land in Goodnews Bay to state; first of several land transfers
BLM conveyed 39,995 acres to the State of Alaska in the Goodnews Bay area of Southwest Alaska under terms of the 1959 Alaska Statehood Act, the largest single conveyance of land to the state in eight years. Alaska De- partment of Natural Resources staff had identified the area as a priority. “This conveyance is just one of many we anticipate in the near future,” said Ted Murphy, BLM’s acting Alaska State Director.
The conveyance is a result of a revocation of Alaska Native Claims Settlement Act-related withdrawals known as ‘d-1s’ (referring to Section 17(d)(1) in ANCSA) that were made prior to ANCSA’s passage but never revoked. There are approximately 50 million acres of BLM-managed federal lands in Alaska encumbered by d-1 with- drawals, approximately the land area of Utah. Over the past four years, BLM has been working on a statewide strategy to initiate large-acreage d-1 revocation recommendations. The State of Alaska has roughly five million acres of a 104 million-acre land entitlement remaining and has previously identified other d-1 withdrawals and lands in the Trans-Alaska Pipeline Corridor as priorities.

Bristol Bay Native Corp. buys environmental service company
Bristol Bay Native Corp. is adding to its portfolio of environmental service companies. BBNC announced Dec. 12 that it has entered into an agreement to purchase Environmental Resource Solutions, Inc., which is based in Jacksonville, Florida. The company specializes in environmental permitting, biological assessments and docu- ment preparation.

Minerals: Pebble’s draft EIS on schedule; company plans 2019 work program at mine site
Pebble Partnership Ltd. plans a 2019 work program at the Pebble mine site but its scope is still being worked out. Meanwhile, the U.S. Army Corps of Engineers is on track for a release of the draft EIS in early spring.